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Commentary

D2C Vs. Demographics: Winning The Diaper Derby

At this writing, I’m waiting for the arrival of my first granddaughter, mulling the complexities of diapers. In the obvious sense, nothing has changed since I was the nappy-changer in chief. I
agonized over cloth versus disposable and fretted over the cost.

But watching the next generation navigate these choices, I’m feeling pangs of pity. Not for this young couple, who
filled the nursery with stacks of chlorine-free, fragrance-free diapers. They may not quite know what they’re in for, but they’ll do fine.

Nope, I’m feeling badly for the
poor marketers trying to do business with young parents. The competition is crazy. There’s the usual titans of tuchus: Luvs, Huggies and Pampers, which just changed the game with Lumi, an app
that monitors wetness levels. Then there’s a bewildering array of private-label offerings, subscription boxes and celebrity players.

And at the same time, they’re all up against an
undeniable truth: The U.S. Center for Disease Control just announced that fertility rates have fallen to an all-time low.

Given all that, what makes the diaper market so attractive to new
companies?

“We had two girls in diapers,” says Amanda Little, who cofounded D2C brand Abby & Finn with her husband a year ago. “We were spending $180 a month or so on
diapers, which seemed nuts. And the subscription model made sense. Everyone wants to avoid those late-night trips to the store.”

So the company carved out a niche all its own. Like
Honest, the behemoth in the D2C diaper trade, its products are chlorine-free and fragrance-free. They’re also about 30% cheaper, Little tells D2C FYI. Another point of differentiation:
Abby & Finn sells diaper boxes in mixed sizes. “Babies grow so quickly, parents often wind up stuck with the wrong sizes.”

And because parents are painfully aware of how pricey
diapers are, Little says the company is sensitive to how many parents struggle to buy them. “We knew we wanted a built-in give-back, so for every box we sell, we donate 30 diapers to our
partners, who distribute them.”

That 30 isn’t a random number. Many daycare centers demand that parents provide a full week’s worth of diapers at the start of the week, a
number that is out of reach for parents struggling with day-to-day finances.

The company even baked that mission into its name. Abby is an anagram for baby, and Finn stands for families in
need.

On average, customers pay about $50 a month, Little says, and the company now has close to 4,000 subscribers. It is working on raising its next round of financing, in part to step up its
marketing on Facebook, Instagram and Google.

She admits the field is crowded and says that while the company is thinking about how it will expand, it’s not likely to be in the same
direction as Honest or Hello Bello, the Kristin Bell-Dax Shepard collaboration sold through Walmart. “Bug spray, sunscreen, cleaners -- we’re not interested in expanding that broadly.
We’ll be going in a different direction.”

And about that plummeting birth rate? Little says the company is banking on new parents being just as discerning about diapers.
“Even with the birth rate falling, it is still a multibillion industry. There’s still a good chunk of the pie we can take, even if there aren’t as many babies.”

Sarah Mahoney covers the retail industry for MediaPost's "Marketing Daily." She also is a contributing editor for "Parents" and "Prevention." Her work appears regularly in such publications as "AARP The Magazine," "Family Circle" and "Good Housekeeping". You can reach Sarah at sarah.s.mahoney@gmail.com.